NRS 694C.460 Account
for Regulation and Supervision of Captive Insurers: Creation; deposits;
transfers to agency for economic development; administrative expenses; transfers
to State General Fund; warrants by State Controller on receipts to Account.

_________

_________

GENERAL PROVISIONS

NRS 694C.010Definitions.As
used in this chapter, unless the context otherwise requires, the words and
terms defined in NRS 694C.020 to 694C.150, inclusive, have the meanings ascribed to
them in those sections.

NRS 694C.020“Affiliated company” defined.“Affiliated
company” means a company in the same corporate system as its parent or a member
organization by virtue of common ownership, control, operation or management.

NRS 694C.030“Agency captive insurer” defined.“Agency
captive insurer” means a captive insurer that is owned or directly or
indirectly controlled by an insurance agency or brokerage and that only insures
risks of policies which are placed by or through the agency or brokerage.

NRS 694C.035“Alien captive insurer” defined.“Alien
captive insurer” means any insurer that is formed to write insurance business
for its parents and affiliates and is licensed pursuant to the laws of an alien
jurisdiction which imposes statutory or regulatory standards acceptable to the
Commissioner on companies transacting the business of insurance in such
jurisdiction.

NRS 694C.040“Association” defined.“Association”
means a legal entity consisting of two or more corporations, limited-liability
companies, partnerships, associations or other forms of business organizations.

NRS 694C.050“Association captive insurer” defined.“Association
captive insurer” means a captive insurer that only insures risks of the member
organizations of an association and the affiliated companies of those members,
including groups formed pursuant to the Product Liability Risk Retention Act of
1981, as amended, 15 U.S.C. §§ 3901 et seq., if:

1. The association or the member
organizations of the association:

(a) Own, control or hold with the power to vote
all the outstanding voting securities of the association captive insurer, if
the association captive insurer is incorporated as a stock insurer; or

(b) Have complete voting control over the captive
insurer, if the captive insurer is formed as a mutual insurer; and

2. The member organizations of the
association collectively constitute all the subscribers of the captive insurer,
if the captive insurer is formed as a reciprocal insurer.

NRS 694C.055“Branch captive insurer” defined.“Branch
captive insurer” means an alien captive insurer licensed pursuant to this
chapter to transact the business of insurance through a business unit with a
principal place of business in this State.

NRS 694C.090“Member organization” defined.“Member
organization” means any individual or corporation, limited-liability company,
partnership, association or other form of business organization that belongs to
an association.

NRS 694C.110“Parent” defined.“Parent”
means a corporation, limited-liability company, partnership, association or
other form of business organization that directly or indirectly owns, controls
or holds with power to vote more than 50 percent of the outstanding voting
securities of:

1. A pure captive insurer organized as a
stock corporation; or

2. The membership of a pure captive
insurer organized as a nonprofit corporation.

NRS 694C.113“Participant” defined.“Participant”
means a corporation, association, limited-liability company, partnership,
trust, sponsor or other business organization, and any affiliate thereof, that
is insured by a sponsored captive insurer, where the losses of the participant
are limited by a participant contract to the participant’s pro rata share of
the assets of one or more protected cells identified in such participant
contract.

NRS 694C.115“Participant contract” defined.“Participant
contract” means a contract by which a sponsored captive insurer insures the
risks of a participant and limits the losses of each such participant to its
pro rata share of the assets of one or more protected cells identified in the
participant contract.

NRS 694C.117“Protected cell” defined.“Protected
cell” means a separate account established by a sponsored captive insurer in
which assets are maintained for one or more participants in accordance with the
terms of one or more participant contracts that fund the liability of the sponsored
captive insurer assumed on behalf of the participants as set forth in the
participant contracts.

NRS 694C.140“Rental captive insurer” defined.“Rental
captive insurer” means a captive insurer formed to enter into contractual
agreements with policyholders or associations to offer some or all of the
benefits of a program of captive insurance and that only insures risks of such
policyholders or associations.

NRS 694C.143“Sponsor” defined.“Sponsor”
means an insurer licensed pursuant to the laws of any state, a reinsurer
authorized or approved under the laws of any state, a captive insurer formed or
licensed pursuant to this chapter or a person that:

1. Meets the requirements of subsection 3
of NRS 694C.180 or is approved as a sponsor by the
Commissioner; and

2. Is approved by the Commissioner to
provide all or part of the capital and surplus required by applicable law and
to organize and operate a sponsored captive insurer.

1. In which the minimum capital and
surplus required by applicable law is provided by one or more sponsors;

2. That is formed or licensed pursuant to
this chapter;

3. That only insures the risks of its
participants through separate participant contracts; and

4. That funds the liability for each
participant through one or more protected cells where the assets of each
protected cell are segregated from the assets of other protected cells and the
assets of the general account of the sponsored captive insurer.

1. Unless otherwise approved by the
Commissioner, a pure captive insurer, an agency captive insurer, a rental
captive insurer or a sponsored captive insurer must be incorporated as a stock
insurer.

2. An association captive insurer must be
formed as a:

(a) Stock insurer;

(b) Mutual insurer; or

(c) Reciprocal insurer, except that its
attorney-in-fact must be a corporation incorporated in this State.

3. A captive insurer shall have not less
than three incorporators or organizers, at least one of whom must be a resident
of this State.

4. Before the articles of incorporation of
a captive insurer may be filed with the Secretary of State, the Commissioner
must approve the articles of incorporation. In determining whether to grant
that approval, the Commissioner shall consider:

(a) The character, reputation, financial standing
and purposes of the incorporators or organizers;

(b) The character, reputation, financial
responsibility, experience relating to insurance and business qualifications of
the officers and directors of the captive insurer;

(c) The competence of any person who, pursuant to
a contract with the captive insurer, will manage the affairs of the captive
insurer;

(d) The competence, reputation and experience of
the legal counsel of the captive insurer relating to the regulation of
insurance;

(e) If the captive insurer is a rental captive
insurer, the competence, reputation and experience of the underwriter of the
captive insurer;

(f) The business plan of the captive insurer; and

(g) Such other aspects of the captive insurer as
the Commissioner deems advisable.

5. The capital stock of a captive insurer
incorporated as a stock insurer must be issued at not less than par value.

6. At least one member of the board of
directors of a captive insurer formed as a corporation, or one member of the
subscribers advisory committee or the attorney-in-fact of a captive insurer
formed as a reciprocal insurer, must be a resident of this State.

7. A captive insurer formed pursuant to
the provisions of this chapter has the privileges of, and is subject to, the
provisions of general corporation law set forth in chapter
78 of NRS and, if formed as a nonprofit corporation, the provisions set
forth in chapter 82 of NRS, as well as the
applicable provisions contained in this chapter. If the provisions of this
chapter conflict with the general provisions in chapter
78 or 82 of NRS governing corporations,
the provisions of this chapter control. The provisions of chapter 693A of NRS relating to mergers,
consolidations, conversions, mutualizations and transfers of domicile to this
State apply to determine the procedures to be followed by captive insurers in
carrying out any of those transactions in accordance with this chapter.

8. The articles of association, articles
of incorporation, charter or bylaws of a captive insurer formed as a
corporation must require that a quorum of the board of directors consists of
not less than one-third of the number of directors prescribed by the articles
of association, articles of incorporation, charter or bylaws.

9. The agreement of the subscribers or
other organizing document of a captive insurer formed as a reciprocal insurer
must require that a quorum of its subscribers advisory committee consists of
not less than one-third of the number of its members.

NRS 694C.190Name.A captive
insurer shall not use or adopt a name that is the same, deceptively similar or
likely to be confused with or mistaken for any other existing business name
registered in this state.

1. One or more sponsors may form a
sponsored captive insurer pursuant to this chapter.

2. A sponsored captive insurer formed or
licensed pursuant to this chapter may establish and maintain one or more
protected cells to insure the risks of one or more participants, subject to the
following conditions:

(a) The shareholders of a sponsored captive
insurer must be limited to its participants and sponsors, provided that the
sponsored captive insurer may issue nonvoting securities to other persons on
terms approved by the Commissioner;

(b) Each protected cell must be accounted for
separately on the books and records of the sponsored captive insurer to reflect
the financial condition and results of operations of that protected cell,
including, but not limited to, the net income or loss, dividends, or other
distributions to participants, and such other factors as may be set forth in
the participant contract or required by the Commissioner;

(c) The assets of a protected cell must not be
chargeable with liabilities arising out of any other insurance business which
the sponsored captive insurer may conduct;

(d) A sponsored captive insurer shall not make a
sale, exchange, transfer of assets, dividend or distribution between or among
any of its protected cells without the consent of any participant for which the
protected cells are maintained;

(e) A sponsored captive insurer shall not make a
sale, exchange, transfer of assets, dividend or distribution from a protected
cell to a sponsor or participant without the prior written approval of the
Commissioner, and the Commissioner shall not give written approval if the sale,
exchange, transfer, dividend or distribution would result in the insolvency or
impairment of the protected cell;

(f) On or before March 1 of each year, a
sponsored captive insurer must file with the Commissioner a report of its
financial condition, including, but not limited to, accounting statements
detailing the financial experience of each protected cell and any other
information required by the Commissioner;

(g) A sponsored captive insurer must notify the
Commissioner not more than 10 business days after a protected cell becomes
insolvent or otherwise unable to meet its claims or expense obligations;

(h) A participant contract must not become
effective without the prior written approval of the Commissioner;

(i) The addition of each new protected cell, the
withdrawal of any participant of a protected cell or the termination of any
existing protected cell constitutes a change in the business plan and requires
the prior written approval of the Commissioner; and

(j) The business written by a sponsored captive
insurer with respect to each protected cell must be:

(1) Fronted by an insurer licensed
pursuant to the laws of any state;

(2) Reinsured by a reinsurer authorized or
approved by the Commissioner; or

(3) Secured by a trust fund in the United
States for the benefit of policyholders and claimants or funded by an
irrevocable letter of credit or other arrangement that is acceptable to the
Commissioner. The amount of security provided must not be less than the
reserves associated with those liabilities, which are not fronted or reinsured
pursuant to subparagraph (1) or (2), including reserves for losses, allocated loss
adjustment expenses, incurred but not reported losses and unearned premiums for
business written through the protected cell maintained for the participant. The
Commissioner may require the sponsored captive insurer to increase the funding
of any security arrangement established under this subsection. If the form of
security is a letter of credit, the letter of credit must be established,
issued or confirmed by a bank chartered in this State, a member of the Federal
Reserve System or a bank chartered in another state if the bank is deemed
acceptable by the Commissioner. A trust maintained pursuant to this
subparagraph must be established in a form and under such terms that are
approved by the Commissioner.

3. A sponsor of a sponsored captive
insurer must:

(a) Be an insurer licensed pursuant to the laws
of any state, a reinsurer authorized or approved under the laws of any state, a
captive insurer formed or licensed pursuant to this chapter or a person approved
as a sponsor by the Commissioner; and

(b) Not be a risk retention group.

4. A participant in a sponsored captive
insurer need not be a shareholder of the sponsored captive insurer or an
affiliate of the sponsored captive insurer and:

(a) May be an association, corporation,
limited-liability company, partnership, trust or other form of business
organization;

(b) May be a sponsor of the sponsored captive
insurer; and

(c) Must not be a risk retention group.

5. A participant in a sponsored captive insurer
shall insure only its own risks through a sponsored captive insurer.

1. Information demonstrating the manner in
which the applicant will account for the loss and expense experience of each
protected cell, at a level of detail deemed sufficient by the Commissioner, and
the method of reporting such information;

2. A written acknowledgment that all
financial records of the sponsored captive insurer, including, but not limited
to, records pertaining to any protected cells, must be made available for
inspection or examination by the Commissioner or a designee of the
Commissioner;

3. All contracts entered into between the
sponsored captive insurer and any participant, including, but not limited to,
participant contracts; and

4. Evidence satisfactory to the
Commissioner indicating that expenses will be allocated to each protected cell
in a fair and equitable manner.

NRS 694C.220Fees for application; Commissioner authorized to retain
professional services; cost of services.An
application by a captive insurer for licensure must include a nonrefundable
application fee of $500. The Commissioner may retain legal, financial and
examination services from outside the Division to review and make
recommendations regarding the qualifying examination of the applicant. The cost
of those services must be paid by the applicant. The provisions of NRS 679B.230 to 679B.287, inclusive, apply to
examinations, investigations and processing conducted pursuant to this section.

1. If the Commissioner determines that the
documents and statements filed by the captive insurer satisfy the requirements
for licensure, the Commissioner shall issue a license to the captive insurer.
The license may be renewed annually upon the satisfaction of all requirements
imposed by the Commissioner and payment of all applicable renewal fees.

2. A captive insurer must pay a fee of
$300 for the issuance of a license and, on or before March 1 of each year, an
annual fee of $300 and, in addition to any other fee or charge, all applicable
fees required pursuant to NRS 680C.110
for the renewal of a license.

NRS 694C.240Insurer to include business plan with application for issuance
and renewal of license; updates to business plan.A
captive insurer shall include its business plan with its application for the
issuance and renewal of a license. If the captive insurer makes any changes to
the business plan, the captive insurer shall, as soon as practicable, file a
copy of the updated business plan with the Commissioner.

1. A captive insurer must not be issued a
license, and shall not hold a license, unless the captive insurer has and
maintains, in addition to any other capital or surplus required to be
maintained pursuant to subsection 3, unimpaired paid-in capital and
unencumbered surplus of:

(a) For a pure captive insurer, not less than
$200,000;

(b) For an association captive insurer, not less
than $500,000;

(c) For an agency captive insurer, not less than
$600,000;

(d) For a rental captive insurer, not less than
$800,000; and

(e) For a sponsored captive insurer, not less
than $500,000.

2. Except as otherwise provided by the
Commissioner pursuant to subsection 3, the capital and surplus required to be
maintained pursuant to this section must be in the form of cash or an
irrevocable letter of credit.

3. The Commissioner may prescribe
additional requirements relating to capital or surplus based on the type,
volume and nature of the insurance business that is transacted by the captive
insurer and requirements regarding which capital and surplus, if any, may be in
the form of an irrevocable letter of credit.

4. A letter of credit used by a captive
insurer as evidence of capital and surplus required pursuant to this section
must:

(a) Be issued by a bank chartered by this State
or a bank that is a member of the United States Federal Reserve System and has
been approved by the Commissioner; and

(b) Include a provision pursuant to which the
letter of credit is automatically renewable each year, unless the issuer gives
written notice to the Commissioner and the captive insurer at least 90 days
before the expiration date.

(3) Has refused or failed to submit an
annual report, as required by NRS 694C.400, or any
other report or statement required by law or by order of the Commissioner;

(4) Has failed to comply with the
provisions of its charter or bylaws;

(5) Has failed to submit to an examination
required pursuant to NRS 694C.410;

(6) Has refused or failed to pay the cost
of an examination required pursuant to NRS 694C.410;

(7) Has used any method in transacting
insurance pursuant to this chapter which is detrimental to the operation of the
captive insurer or would make its condition unsound with respect to its
policyholders or the general public; or

(8) Has failed otherwise to comply with
the laws of this State; and

(b) The suspension or revocation of the license
of the captive insurer is in the best interest of its policyholders or the
general public.

2. The provisions of NRS 679B.310 to 679B.370, inclusive, apply to hearings
conducted pursuant to this section.

(c) May provide excess workers’ compensation
insurance to its parent and affiliated companies, unless otherwise prohibited
by the laws of the state in which the insurance is transacted.

(d) May reinsure workers’ compensation insurance
provided pursuant to a program of self-funded insurance of its parent and
affiliated companies if:

(1) The parent or affiliated company which
is providing the self-funded insurance is certified as a self-insured employer
by the Commissioner, if the insurance is being transacted in this State; or

(2) The program of self-funded insurance
is otherwise qualified pursuant to, or in compliance with, the laws of the
state in which the insurance is transacted.

3. A pure captive insurer shall not insure
any risks other than those of its parent and affiliated companies or controlled
unaffiliated businesses.

4. An association captive insurer shall
not insure any risks other than those of the member organizations of its
association and the affiliated companies of the member organizations.

5. An agency captive insurer shall not
insure any risks other than those of the policies that are placed by or through
the insurance agency or brokerage that owns the captive insurer.

6. A rental captive insurer shall not
insure any risks other than those of the policyholders or associations that
have entered into agreements with the rental captive insurer for the insurance
of those risks. Such agreements must be in a form which has been approved by
the Commissioner.

7. A sponsored captive insurer shall not
insure any risks other than those of its participants.

8. As used in this section, “excess
workers’ compensation insurance” means insurance in excess of the specified
per-incident or aggregate limit, if any, established by:

(a) The Commissioner, if the insurance is being
transacted in this State; or

(b) The chief regulatory officer for insurance in
the state in which the insurance is being transacted.

1. The board of directors of a captive
insurer shall meet at least once each year in this State. The captive insurer
shall:

(a) Maintain its principal place of business in
this State; and

(b) Appoint a resident of this State as a
registered agent to accept service of process and otherwise act on behalf of
the captive insurer in this State. If the registered agent cannot be located
with reasonable diligence for the purpose of serving a notice or demand on the
captive insurer, the notice or demand may be served on the Secretary of State
who shall be deemed to be the agent for the captive insurer.

2. A captive insurer shall not transact
insurance in this State unless:

(a) The captive insurer has made adequate
arrangements with a bank located in this State that is authorized pursuant to
state or federal law to transfer money;

(b) If the captive insurer employs or has entered
into a contract with a natural person or business organization to manage the
affairs of the captive insurer, the natural person or business organization
meets the standards of competence and experience satisfactory to the
Commissioner;

(c) The captive insurer employs or has entered
into a contract with a qualified and experienced certified public accountant
who is approved by the Commissioner or a firm of certified public accountants that
is nationally recognized;

(d) The captive insurer employs or has entered
into a contract with qualified, experienced actuaries who are approved by the
Commissioner to perform reviews and evaluations of the operations of the
captive insurer; and

(e) The captive insurer employs or has entered
into a contract with an attorney who is licensed to practice law in this State
and who meets the standards of competence and experience in matters concerning
the regulation of insurance in this State established by the Commissioner by
regulation.

NRS 694C.320Plan for payment of dividends; regulations.The Commissioner may approve an ongoing plan
for the payment of dividends or other distributions by a captive insurer if, at
the time of each payment or distribution, the retention of capital by the
captive insurer is in excess of the amounts required by the Commissioner. The
Commissioner shall adopt by regulation:

1. A specific amount that a captive insurer
must have in excess capital for the approval of an ongoing plan for the payment
of dividends or other distributions; or

2. A formula pursuant to which the
specific amount of required excess capital may be calculated.

NRS 694C.330Payment of dividends.Except
as otherwise provided in this section, a captive insurer shall pay dividends out
of, or make any other distributions from, its capital or surplus, or both, in
accordance with the provisions set forth in NRS 692C.370, 693A.140, 693A.150 and 693A.160. A captive insurer shall not
pay dividends out of, or make any other distribution with respect to, its
capital or surplus, or both, in violation of this section unless the captive
insurer has obtained the prior approval of the Commissioner to make such a
payment or distribution.

NRS 694C.340Investments; loan to parent or affiliated company in certain
circumstances.

1. Except as otherwise provided in this
section and NRS 694C.382, an association captive
insurer, an agency captive insurer, a rental captive insurer or a sponsored
captive insurer shall comply with the requirements relating to investments set
forth in chapter 682A of NRS. Upon the
request of the association captive insurer, agency captive insurer, rental
captive insurer or sponsored captive insurer, the Commissioner may approve the
use of reliable, alternative methods of valuation and rating.

2. A pure captive insurer is not subject
to any restrictions on allowable investments, except that the Commissioner may
prohibit or limit any investment that threatens the solvency or liquidity of
the pure captive insurer.

3. A pure captive insurer may make a loan
to its parent or affiliated company if the loan:

(a) Is first approved in writing by the
Commissioner;

(b) Is evidenced by a note that is in a form that
is approved by the Commissioner; and

(c) Does not include any money that has been set
aside as capital or surplus as required by subsection 1 of NRS 694C.250.

NRS 694C.350Reinsurance; credit for reserves on risks or portions of risks
in certain circumstances; plan for workers’ compensation deemed reinsurance in
certain circumstances.

1. A captive insurer may provide
reinsurance on risks ceded by any other insurer.

2. A captive insurer may take credit for
reserves on risks or portions of risks ceded to a reinsurer that is in
compliance with NRS 681A.140 to 681A.240, inclusive. A captive insurer
shall not take credit for reserves on risks or portions of risks ceded to a
reinsurer if the reinsurer is not in compliance with NRS 681A.140 to 681A.240, inclusive.

3. The Commissioner may authorize a
captive insurer to take credit for reserves on risks or portions of risks ceded
to a pool, an exchange or an association acting as a reinsurer. The
Commissioner may require such documents, financial information or other
evidence as the Commissioner determines necessary to show that the pool, exchange
or association will be able to provide adequate security for its financial
obligations. The Commissioner may deny authorization or impose any limitations
on the activities of a reinsurance pool, exchange or association that, in the
judgment of the Commissioner, are necessary and proper to provide adequate
security for the ceding captive insurer and for the protection and benefit of
the general public.

4. For the purposes of this chapter,
insurance provided by a captive insurer of any plan for workers’ compensation
of its parent and affiliated companies which is certified or otherwise
qualified in the state in which the insurance is provided as a self-insurance
plan shall be deemed to be reinsurance.

NRS 694C.360Use of insurance of captive insurer to satisfy requirements
relating to insurance on vehicles subject to Nevada Transportation Authority or
Taxicab Authority prohibited; exception.Insurance
provided by a captive insurer in accordance with this chapter may not be used
to satisfy the requirements set forth in chapter
706 of NRS relating to the insurance required to be maintained by vehicles
subject to the jurisdiction of the Nevada Transportation Authority or Taxicab
Authority, unless the Nevada Transportation Authority or Taxicab Authority, as
appropriate, specifically approves the use of insurance provided by a captive
insurer for that purpose.

NRS 694C.380Insurer prohibited from joining or contributing to risk-sharing
plan, risk pool or insurance insolvency guaranty fund.A
captive insurer shall not join or contribute financially to any risk-sharing
plan, risk pool or insurance insolvency guaranty fund in this state. A captive
insurer or its insured, its parent or an affiliated company, or any member
organization of its association shall not receive any benefit from such a plan,
pool or fund for claims arising out of the operations of the captive insurer.

NRS 694C.382Combining assets for investment.Notwithstanding
the provisions of this chapter, the assets of two or more protected cells may
be combined for the purpose of investment, and such combination must not be
construed as defeating the separation of the assets for accounting or other
purposes. Sponsored captive insurers shall comply with the investment
requirements set forth in NRS 694C.340, if
applicable, except to the extent that credit for reinsurance ceded to
reinsurers is allowed pursuant to NRS 694C.350 or
to the extent otherwise deemed reasonable and appropriate by the Commissioner.
Notwithstanding the provisions of this chapter, the Commissioner may approve
the use of alternative reliable methods of valuation and rating.

1. As security for the payment of
liabilities attributable to the branch operations of a branch captive insurer,
the Commissioner shall require that a trust fund, funded by an irrevocable
letter of credit or other acceptable asset, be established and maintained in
the United States for the benefit of United States policyholders and ceding
United States insurers under insurance policies or reinsurance contracts issued
or assumed by the branch captive insurer through its branch operations.

2. The amount of the security must be not
less than the total amount required by NRS 694C.250,
and any reserves on such insurance policies or reinsurance contracts, including
reserves for losses, allocated loss adjustment expenses, incurred but not
reported losses and unearned premiums with regard to business written through
the branch operations. The Commissioner may authorize a branch captive insurer
that is required to post security for loss reserves on branch business by its
reinsurer to reduce the funds in the trust account required by this section by
that same amount as long as the security remains posted with the reinsurer.

3. If the form of the security is a letter
of credit, the letter of credit must be established, issued or confirmed by a
bank chartered in this State or a bank that is a member of the Federal Reserve
System.

NRS 694C.386Alien captive insurer; issuance of certificate; registration.An alien captive insurer licensed as a branch
captive insurer shall petition the Commissioner to issue a certificate setting
forth the finding of the Commissioner that, after considering the character,
reputation, financial responsibility, insurance experience and business
qualifications of the officers and directors of the alien captive insurer, the
licensing and maintenance of the branch operations will promote the general
welfare of the State. The alien captive insurer may register to do business in
this State after the certificate is issued by the Commissioner.

NRS 694C.388Reports and statements of alien captive insurer.Before March 1 of each year or, if approved by
the Commissioner, not more than 60 days after the expiration of the fiscal year
of the branch captive insurer, the branch captive insurer shall file with the
Commissioner a copy of all reports and statements required to be filed under
the laws of the jurisdiction in which the alien captive insurer is domiciled.
The reports and statements must be verified by oath of two of the executive
officers of the alien captive insurer. If the Commissioner is satisfied that
the annual report filed by the alien captive insurer in the jurisdiction in
which it is domiciled provides adequate information concerning the financial
condition of the alien captive insurer, the Commissioner may waive the
requirement for completion of the captive annual statement for business written
in the alien jurisdiction.

1. On or before March 1 of each year, a
captive insurer shall submit to the Commissioner a report of its financial
condition. A captive insurer shall use generally accepted accounting principles
and include any useful or necessary modifications or adaptations thereof that
have been approved or accepted by the Commissioner for the type of insurance
and kinds of insurers to be reported upon, and as supplemented by additional
information required by the Commissioner. Except as otherwise provided in this
section, each association captive insurer, agency captive insurer, rental
captive insurer or sponsored captive insurer shall file its report in the form
required by NRS 680A.270. The
Commissioner shall adopt regulations designating the form in which pure captive
insurers must report.

2. A pure captive insurer may apply, in
writing, for authorization to file its annual report based on a fiscal year
that is consistent with the fiscal year of the parent company of the pure
captive insurer. If an alternative date is granted, the annual report is due
not later than 60 days after the end of each such fiscal year.

3. A pure captive insurer shall file on or
before March 1 of each year such forms as required by the Commissioner by
regulation to provide sufficient detail to support its premium tax return filed
pursuant to NRS 694C.450.

4. Any captive insurer failing, without
just cause beyond the reasonable control of the captive insurer, to file its
annual statement as required by subsection 1 shall pay a penalty of $100 for
each day the captive insurer fails to file the report, but not to exceed an
aggregate amount of $3,000, to be recovered in the name of the State of Nevada
by the Attorney General.

5. Any director, officer, agent or
employee of a captive insurer who subscribes to, makes or concurs in making or
publishing, any annual or other statement required by law, knowing the same to
contain any material statement which is false, is guilty of a gross
misdemeanor.

NRS 694C.410Examination by Commissioner; Commissioner authorized to obtain
professional services; cost of examination.

1. Except as otherwise provided in this
section, at least once every 3 years, and at such other times as the
Commissioner determines necessary, the Commissioner, or a designee of the
Commissioner, shall visit each captive insurer and thoroughly inspect and
examine the affairs of the captive insurer to ascertain:

(a) The financial condition of the captive
insurer;

(b) The ability of the captive insurer to fulfill
its obligations; and

(c) Whether the captive insurer has complied with
the provisions of this chapter and the regulations adopted pursuant thereto.

2. Upon the application of a captive
insurer, the Commissioner may conduct the visits required pursuant to
subsection 1 every 5 years if the captive insurer conducts comprehensive annual
audits:

(a) The scope of which is satisfactory to the
Commissioner; and

(b) Which are conducted by an independent auditor
appointed by the Commissioner.

3. The provisions of subsections 1 and 2
do not apply to a pure captive insurer. The Commissioner may conduct an
examination of a pure captive insurer at any reasonable time to ascertain:

(a) The financial condition of the pure captive
insurer;

(b) The ability of the pure captive insurer to
fulfill its obligations; and

(c) Whether the pure captive insurer has complied
with the provisions of this chapter and the regulations adopted pursuant
thereto.

4. The Commissioner may contract to obtain
legal, financial and examination services from outside the Division to conduct
the examination and make recommendations to the Commissioner. The cost of the
examination must be paid to the Commissioner by the captive insurer.

5. The provisions of NRS 679B.230 to 679B.287, inclusive, apply to
examinations conducted pursuant to this section.

1. The examination of a branch captive
insurer pursuant to NRS 694C.410 must be of branch
business and branch operations only, so long as the branch captive insurer
provides to the Commissioner on an annual basis a certificate of compliance, or
equivalent documentation, issued by or filed with the licensing authority of
the jurisdiction in which the branch captive insurer is formed, and
demonstrates to the satisfaction of the Commissioner that it is operating in a
sound financial condition and in accordance with all applicable laws and
regulations of that jurisdiction.

2. As a condition of licensure, the alien
captive insurer must authorize the Commissioner to examine the affairs of the
alien captive insurer in the jurisdiction in which the alien captive insurer is
formed.

NRS 694C.450Taxes on premiums; deposit of portion of taxes in Account for
Regulation and Supervision of Captive Insurers; deposit of remainder of taxes
in State General Fund.

1. Except as otherwise provided in this
section, a captive insurer shall pay to the Division, not later than March 1 of
each year, a tax at the rate of:

(a) Two-fifths of 1 percent on the first
$20,000,000 of its net direct premiums;

(b) One-fifth of 1 percent on the next
$20,000,000 of its net direct premiums; and

(c) Seventy-five thousandths of 1 percent on each
additional dollar of its net direct premiums.

2. Except as otherwise provided in this
section, a captive insurer shall pay to the Division, not later than March 1 of
each year, a tax at a rate of:

(a) Two hundred twenty-five thousandths of 1
percent on the first $20,000,000 of revenue from assumed reinsurance premiums;

(b) One hundred fifty thousandths of 1 percent on
the next $20,000,000 of revenue from assumed reinsurance premiums; and

(c) Twenty-five thousandths of 1 percent on each
additional dollar of revenue from assumed reinsurance premiums.

Ê The tax on
reinsurance premiums pursuant to this subsection must not be levied on premiums
for risks or portions of risks which are subject to taxation on a direct basis
pursuant to subsection 1. A captive insurer is not required to pay any
reinsurance premium tax pursuant to this subsection on revenue related to the
receipt of assets by the captive insurer in exchange for the assumption of loss
reserves and other liabilities of another insurer that is under common
ownership and control with the captive insurer, if the transaction is part of a
plan to discontinue the operation of the other insurer and the intent of the
parties to the transaction is to renew or maintain such business with the
captive insurer.

3. If the sum of the taxes to be paid by a
captive insurer calculated pursuant to subsections 1 and 2 is less than $5,000
in any given year, the captive insurer shall pay a tax of $5,000 for that year.
The maximum aggregate tax for any year must not exceed $175,000. The maximum
aggregate tax to be paid by a sponsored captive insurer applies only to each
protected cell and does not apply to the sponsored captive insurer as a whole.

4. Two or more captive insurers under
common ownership and control must be taxed as if they were a single captive
insurer.

5. Notwithstanding any specific statute to
the contrary and except as otherwise provided in this subsection, the tax provided
for by this section constitutes all the taxes collectible pursuant to the laws
of this State from a captive insurer, and no occupation tax or other taxes may
be levied or collected from a captive insurer by this State or by any county,
city or municipality within this State, except for taxes imposed pursuant to chapter 363A or 363B
of NRS and ad valorem taxes on real or personal property located in this State
used in the production of income by the captive insurer.

6. Twenty-five percent of the revenues
collected from the tax imposed pursuant to this section must be deposited with
the State Treasurer for credit to the Account for the Regulation and
Supervision of Captive Insurers created pursuant to NRS
694C.460. The remaining 75 percent of the revenues collected must be
deposited with the State Treasurer for credit to the State General Fund.

7. A captive insurer that is issued a
license pursuant to this chapter after July 1, 2003, is entitled to receive a
nonrefundable credit of $5,000 applied against the aggregate taxes owed by the
captive insurer for the first year in which the captive insurer incurs any
liability for the payment of taxes pursuant to this section. A captive insurer
is entitled to a nonrefundable credit pursuant to this section not more than
once after the captive insurer is initially licensed pursuant to this chapter.

8. As used in this section, unless the
context otherwise requires:

(a) “Common ownership and control” means:

(1) In the case of a stock insurer, the
direct or indirect ownership of 80 percent or more of the outstanding voting
stock of two or more corporations by the same member or members.

(2) In the case of a mutual insurer, the
direct or indirect ownership of 80 percent or more of the surplus and the
voting power of two or more corporations by the same member or members.

(b) “Net direct premiums” means the direct
premiums collected or contracted for on policies or contracts of insurance
written by a captive insurer during the preceding calendar year, less the
amounts paid to policyholders as return premiums, including dividends on
unabsorbed premiums or premium deposits returned or credited to policyholders.

NRS 694C.460Account for Regulation and Supervision of Captive Insurers:
Creation; deposits; transfers to agency for economic development;
administrative expenses; transfers to State General Fund; warrants by State
Controller on receipts to Account.

1. There is hereby created in the Fund for
Insurance Administration and Enforcement created by NRS 680C.100 an Account for the
Regulation and Supervision of Captive Insurers. Money in the Account must be
used only to carry out the provisions of this chapter or for any other purpose
authorized by the Legislature. Except as otherwise provided in NRS 680C.110 and 694C.450,
all fees and assessments received by the Commissioner or Division pursuant to
this chapter must be credited to the Account. Not more than 2 percent of the
tax collected and deposited in the Account pursuant to NRS
694C.450, may, upon application by the Division or an agency for economic
development to, and with the approval of, the Interim Finance Committee, be
transferred to an agency for economic development to be used by that agency to
promote the industry of captive insurance in this State.

2. Except as otherwise provided in this
section, all payments from the Account for the maintenance of staff and
associated expenses, including contractual services, as necessary, must be
disbursed from the State Treasury only upon warrants issued by the State
Controller, after receipt of proper documentation of the services rendered and
expenses incurred.

3. At the end of each fiscal year, that
portion of the balance in the Account which exceeds $500,000 must be
transferred to the State General Fund.

4. The State Controller may anticipate
receipts to the Account and issue warrants based thereon.